FCC Approves Ownership Rule Changes and Next-Gen TV ATSC 3.0 Standard

At its meeting yesterday, as expected, the FCC approved significant changes to its broadcast ownership rules and also approved the roll out of ATSC 3.0 – the next generation television transmission standard. While any change in ownership rules is always a contentious issue, and thus the 3-2 strict party-line vote approving the ownership changes might not have been surprising, the television technology change adopted yesterday proved to be controversial as well, also being approved by a 3-2 vote.

As of the writing of this article on Friday morning, the final texts of these decisions have not been released, so the details of these actions are not available. We will write further about the decisions next week when we have had a chance to digest the final orders. But summaries of both decisions, and the texts of the Commissioner’s statements on the issues, were released late yesterday.

On ownership, the summary of the FCC decision says that the FCC made several changes to its rules, reconsidering the FCC ownership decision made in August of 2016 when Chairman Wheeler left most of the existing ownership rules in place. The changes adopted include:

Eliminating the newspaper-broadcast cross-ownership rule

Eliminating the radio-television cross-ownership rule

Allowing the combination of two TV stations in a market even if there are not 8 independent owners and operators of full-power TV stations in the market after the combination

Permitting case-by-case consideration of combinations of two of the Top 4 TV stations in a market. Any such combination is prohibited under current FCC rules

Giving a presumptive waiver to owners of radio stations in “embedded markets” allowing them to acquire stations in other embedded markets in the same metropolitan area without evaluating the ownership combination in the parent market (for more details about this issue, see our article here).

Eliminating the attribution for ownership purposes of TV Joint Sales Agreements (meaning that JSAs between 2 TV stations will be allowed even if the party selling advertising time on another TV station could not own that station under the local TV ownership rules)

Providing for the filing with the FCC of Shared Services Agreements – agreements between TV stations that provide for some sort of joint operations less than a JSA or Time Brokerage Agreement.

The initial draft of the FCC Order (see our article here) said that these rule changes would be effective 30 days after they are published in the Federal Register. We will see if that timing is also adopted in the final order. It also must be noted that many of these changes may well be subject to appeal – perhaps back to the US Court of Appeals for the Third Circuit which has questioned FCC decision making on these issues in the past (see, for instance, our articles here and here). And, while this may mark the end of the 2014 Quadrennial Review of the FCC’s Ownership Rules, the Chairman noted that the 2018 review of the rules will begin soon, perhaps bringing more review of the radio ownership rules, including a potential review of radio subcaps (called for by Commissioner O’Rielly in his statement on the rule changes).

On ATSC 3.0, the FCC press release stated that the following rules have been adopted for the transition to the new transmission standard:

Requires broadcasters that use Next Generation TV to partner with another local station in their market to simulcast their programming in the current DTV standard, called ATSC 1.0, so that viewers can continue to receive their existing broadcast service without having to purchase new equipment;

Subjects Next Gen TV signals to the public interest obligations that currently apply to television broadcasters; and

Requires broadcasters to provide advance on-air notifications to educate consumers about Next Generation TV service deployment and simulcasting.

There are many more detailed obligations that are imposed on the transition which we will address when the FCC’s final order is released.

The Democratic Commissioners objected to this transition based on concerns for consumers – believing that the transition will impose costs on consumers to transition to the new television standard (which will require a new TV or converter to be received) which will not be reimbursed, that the transition has not been approved by Congress, and that there are no privacy protections for consumers given that the new TV standard will allow targeted advertising and programming. See the dissenting statements of Commissioner’s Rosenworcel here and Commissioner Clyburn here. Of course, mobile phone technology has upgrades all the time which often require new equipment with little regulatory concern for consumers, but there has always been greater concern about the protection of consumer’s access to television, as reflected in these dissenting statements.

Despite the controversy, the FCC meeting yesterday marked significant changes for broadcasters that will no doubt cause important changes in the industry in the short term. We will be watching as these changes play out in the coming months.

About David Oxenford

David Oxenford represents broadcasting and digital media companies in connection with
regulatory, transactional and intellectual property issues. He has represented broadcasters before the Federal Communications Commission, the courts and other government agencies for over 30 years. Continue Reading

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David is a partner at the law firm of Wilkinson Barker Knauer LLP, practicing out of its Washington, DC office. He has represented broadcasters for over 30 years on a wide array of matters from the negotiation and structuring of station purchase and sale agreements to regulatory matters. His regulatory expertise includes all areas of broadcast law including the FCC’s multiple ownership limitations, the political broadcasting rules, EEO policy, advertising issues, and other programming matters and FCC technical rules.